NACHA—the electronic banking organization that makes direct deposit and other electronic transactions possible—has revised its operating rules to allow for the same-day settlement of electronic transactions, such as.
To your benefit: The rule change will allow you to pay terminating employees electronically, instead of cutting paper checks. You will also be better able to respond to emergencies, make off-cycle payments (e.g., reimbursements) and correct errors in employees’ pay and tax deposits.
Exception: Transactions exceeding $25,000 won’t be eligible for same-day settlement.
Speeding up payments. All electronic payments (credits and debits) move through the ACH network. Currently, most ACH payments are settled the next business day. In Phase 1, ACH credit transactions will be eligible for same-day processing, supporting such uses as hourly payroll, person-to-person payments and same-day bill pay. Phase 1 kicks in Sept. 23, 2016.
ACH LINGO: Your bank is the originating institution; employees’ banks are the receiving institutions. ACH transactions, like direct deposit, are settled.
Same-day ACH will build on existing next-day ACH capabilities. There will be two new settlement windows. The morning submission deadline will be
10:30 a.m., with settlement at 1 p.m. The afternoon submission deadline will be 3 p.m., with settlement occurring at 5 p.m. This increases the movement of funds among banks to three times a day, from once a day.
Phase 1 of the rule mandates that receiving banks accept same-day transactions and make those funds available by the end of the day.
Catch: Participation in same-day transactions is voluntary for originating banks. If you’re interested in these services, talk to your bank to determine whether same-day settlement is appropriate and cost effective, and discuss the new file submission cutoff times.
Next phases. Phase 2, which will include same-day ACH debits, will be implemented Sept. 15, 2017. Phase 3, which will require employees’ banks to make funds available at 5 p.m. local time, will be implemented March 16, 2018.